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The decline of Bitcoin from $29,000 in mid-August has notably altered market conditions. Although there was a brief surge to $27,000 following Grayscale’s victory over the SEC, Bitcoin remains around $25,700.
Graph illustrating Bitcoin’s price from Aug. 1 to Sep. 7, 2023 (Source: CryptoSlate BTC)
A closer examination of on-chain metrics indicates that this downward trend is largely driven by short-term holders selling their assets.
One of the key indicators in this context is the short-term holder percent transfer volume in profit. This metric provides insights into the on-chain value settled by short-term holders, whether it is in profit or loss.
A positive figure suggests that more than 50% of the short-term holder transfer volume is profitable, while a negative figure indicates that over half of the transfer volume is at a loss.
Data from Glassnode reveals a decline in the STH transfer volume profit that coincides with Bitcoin’s drop from $29,400. As of Sep. 6, the STH transfer volume bias was at –23.5%, showing that a considerable portion of the transfer volume from short-term holders was at a loss.
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Graph depicting the short-term holder percent transfer volume in profit from June to September 2023 (Source: Glassnode)
In contrast, long-term holders display a more stable position. Their metrics began to reflect transfers at a loss only from Sep. 3. By Sep. 6, the long-term holder percent transfer volume bias was noted at -5.5%, indicating that the majority of long-term holders remain profitable despite recent market fluctuations.
Graph showing the long-term holder percent transfer volume in profit from June to September 2023 (Source: Glassnode)
Another important metric is the short-term holder spent volume as a percentage of held supply. This metric illustrates the share of on-chain transfer volume by short-term holders in relation to their total held supply. Historically, significant changes in this metric have been linked to high-volatility events. On Sept. 3, 3.1% of the total short-term holder supply was transacted at a loss. The last time such a high percentage was recorded was in mid-March, coinciding with Bitcoin’s price drop from $23,000 to $20,000.
Graph illustrating short-term holder spent volume as a percent of held supply YTD (Source: Glassnode)
The increased selling pressure from short-term holders may reflect a lack of confidence in Bitcoin’s short-term price outlook. Nevertheless, the stability exhibited by long-term holders indicates a sustained belief in Bitcoin’s long-term value.
The post Short-term holders bear the brunt of Bitcoin’s volatility appeared first on CryptoSlate.
